The Association of Equipment Manufacturers (AEM) and the Committee for European Construction Equipment (CECE) have signed a cooperative agreement that will help promote visibility for AEM exhibitions worldwide and a positive global business environment for exhibitors as well as visitors.

CECE represents the European construction equipment sector and its 13 national construction equipment manufacturing associations.

AEM is the North American-based international business group representing the off-road equipment manufacturing industry. A key service is organizing global trade exhibitions, including CONEXPO-CON/AGG, held every three years in Las Vegas, USA.

Under the agreement, AEM becomes a gold-level participant in CECE’s Exhibition Partner Programme, which provides promotional and other business-development services.

Construction equipment trade exhibitions play a vital role in encouraging and enhancing business relationships for manufacturers, suppliers, service providers and customers, and CECE explains it offers this coveted patronage to a limited number of leading sector exhibitions to fortify relations and contribute to successful trade fairs.

Longtime cooperation between CECE & AEM

Bernd Holz, CECE president and director of Ammann Verdichtung GmbH and Ammann sales director Europe, stated: “AEM and CECE are key partners on the international stage, both with regard to cooperation on regulatory matters as well as fostering business opportunities through major trade exhibitions around the world. With the new partnership agreement, we underline and reinforce our long-standing relations, keeping a clear focus on both our member companies’ needs. I’m looking forward to a successful partnership.”

Michael A. Haberman, AEM chair and president of Gradall Industries, stated: “AEM has enjoyed a longstanding and very good relationship with CECE as we work on behalf of equipment manufacturers and service providers towards an improved business environment around the globe for all industry stakeholders. AEM trade shows are known as industry gathering places providing unparalleled ROI and this valued CECE support strengthens that relationship and our future endeavors.”

Nonfarm payrolls rose 178,000 in November. Job growth has averaged 176,000 over the past three months, with private sector payrolls up an average of 165,000 amid strength in the service sector, especially professional & business services (top chart). These gains are consistent with solid consumer spending and continued economic growth. Aggregate hours worked are up a healthy 2.7 percent annualized over the past three months.

The unemployment rate declined to 4.6 percent as the labor force participation rate once again slid. On balance, these results remain within the FOMC’s range for full employment and indicate the labor market continues to tighten. The U-6 unemployment rate, a focus of President- elect Donald Trump, declined to 9.3 percent, marking a new cycle low.

In contrast, manufacturing payrolls were down 4,000 in November. The distinction between nondurables (up over the past year) and durables (down over the same period) persists. The factory sector continues to face the usual headwinds, including a strong dollar and sluggish growth abroad, but recent data suggest manufacturing has begun to firm, which should bode well for payrolls in this sector going forward. Construction jobs rose 19,000 in November and these gains are consistent with improvement in housing and nonresidential construction.

Wage Growth Soft in November, Real Wages Up Over the Year

Average hourly earnings disappointed in November, declining 0.1 percent. Earnings are still up 2.5 percent over the past year and add to the evidence of a tightening labor market. Wage gains remain widespread across industries (middle chart). Over the past year, wage gains of 2.5 percent exceeded the rise in the Consumer Price Index of 1.6 percent, thereby resulting in real wage gains and providing support for improved consumer spending. Wages in sectors such as leisure & hospitality, information and construction have recorded strong gains over the past year.

Unit Labor Costs and Profits as the Business Cycle Ages

Rising labor compensation in the face of small gains in labor productivity gives rise to higher unit labor costs and profit pressures in an aging business cycle. A tighter labor market should prompt a continued strengthening in wage growth now that we are in the range of full employment, and this is what we have witnessed over the past year. Given the absence of a pickup in productivity growth, rising unit labor costs will force companies to either accept lower profit margins or pass the costs onto consumers through higher prices. A combination of the two is typical, with profit growth slowing and inflation rising when the economy reached full employment in previous cycles (bottom chart). A third door remains open if the economy can pick up the pace of growth—we shall see.

The U.S. construction industry added 19,000 net new jobs in November and has now added jobs for three consecutive months, according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC).

Industry employment is up by 2.4 percent on a year-over-year basis, considerably faster than the overall economy’s 1.6 percent job growth rate. Construction industry employment growth would likely be much sharper if more suitably skilled or trainable workers were available to fill available job openings. The skilled labor shortage appears to be impacting nonresidential activity more than residential. The nonresidential sector added 1,100 net new jobs in November, while the residential sector added 19,600 positions. Heavy and civil engineering lost 2,100 jobs for the month.

“The demand for construction talent was strong before the election, and the outcome has improved the near-term outlook for private and public construction activity,” said ABC Chief Economist Anirban Basu. “The implication is that demand for construction workers is positioned to remain high, which will translate into gradual reduction in industry unemployment and significant wage pressures.

“Some of these wage pressures are already evident,” said Basu. “Construction firms in the nation’s hottest markets, including New York, Seattle and Miami, report that in certain occupational categories, compensation is rising at a 10 percent per annum pace or more. This appears to be particularly true for construction superintendents and managers.

“Next year is shaping up to be a good one for both residential and nonresidential construction segments,” said Basu. “Of the two branches of the industry, nonresidential likely offers the larger upside. An infrastructure-led stimulus package would largely be oriented around nonresidential activities. Moreover, in certain markets, there is evidence that the apartment market is approaching saturation. Expected increases in interest rates next year would also tend to hit certain residential activities (i.e., single-family construction) more forcefully.”

The construction unemployment rate remained unchanged at 5.7 percent in November. One might have expected that this rate would have declined given the generally elevated levels of demand for construction talent. However, there are certain parts of the country that are softer economically, including many commodity-rich communities that have been impacted by lower oil and natural gas prices. Moreover, it is difficult to assess the skill level of jobseekers.

The unemployment rate for all U.S. industries fell to 4.6 percent, the lowest rate since mid-2007 and 0.3 percentage points below October’s rate. The labor force lost 226,000 persons for the month, but is still more than 2 million people larger than at the same time one year ago.

Following a surge in the third quarter in private nonresidential construction, the pace of spending slowed to start Q4. Spending on residential construction showed some signs of strengthening in the fourth quarter.

Private residential construction rose 1.6 percent with single and multifamily both posting 2.8 percent increases, while home improvement fell 0.6 percent for the month. The bounce back in private residential supports our view for a rebound in residential investment in Q4.

A rise in both federal and state & local construction are supportive of greater government investment in Q4.

In the final weeks of the lame-duck session, a national poll released Friday by the Association of Equipment Manufacturers (AEM) found that voters strongly support federal funding for water pipelines and waterways as well as for resources that prevent drinking water contamination crises, like those that occurred in Flint, MI.

The findings were part of a national poll commissioned by AEM to gauge voter perceptions and attitudes about United States water infrastructure broadly and the Water Resources Development Act (WRDA) of 2016 specifically, a major water infrastructure resource authorization bill currently awaiting final passage in the lame-duck Congress.

“Improving and modernizing U.S. infrastructure overall, and in this case, water infrastructure, continues to be a bipartisan priority among voters,” said Dennis Slater, AEM President. “Congressional leaders in both the U.S. Senate and House are to be commended for taking action on their respective versions of a 2016 WRDA bill, but should reach consensus on a final version before the 114th Congress adjourns.”

The national poll identified a number of key findings, including:

A majority (54 percent) of registered voters say that U.S. water infrastructure is in fair or poor condition.
Nearly seven out of 10 (67 percent) of the surveyed population believe that the federal government should spend somewhat more or much more on water pipelines and waterways.
More than seven out of every 10 (74 percent) registered voters either support or strongly support Congress passing WRDA.
A clear majority (73 percent) of registered voters are either somewhat or much more likely to support WRDA when they learn that it might prevent drinking water crises such as the one in Flint, MI.
The national poll was conducted as part of AEM’s ongoing efforts to develop a long-term national vision for U.S. infrastructure through its Infrastructure Vision 2050 initiative. An analysis of the poll results is available here.

AEM is the North American-based international trade group providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 940 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with offices in the world capitals of Washington, D.C.; Ottawa, Canada; and Beijing, China.